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Gold Prices Retreat as Stocks Rally

Gold prices fell Friday as a relief rally in US equities sapped investor appetite for haven assets like precious metals.

The most actively traded contract, for December delivery, fell $2.20, or 0.2%, to $1,239 a troy ounce on the Comex division of the New York Mercantile Exchange.

US equities marched higher, recovering from recent losses, as upbeat economic data revived the appeal of assets that benefit from US growth. The S&P 500 index was recently up 22.97 points, or 1.2%, at 1885.73, while the Dow Jones Industrial Average rose 1.5% to 16361.70.

Housing starts in the US rose 6.3% in September from a month earlier, beating economists’ forecasts of a 4.6% increase, while the Thomson-Reuters/University of Michigan preliminary October sentiment index rose to 86.4 from the final September reading of 84.6.

Higher Equities

The move higher in equities weighed on gold, said Frank McGhee, head precious metals dealer with Integrated Brokerage Services in Chicago.

“The real fear driver has been the stock market over the past few days,” he said.

Gold and stocks tend to move in opposite directions as the precious metal is seen as a store of value and a hedge against economic turbulence, while equities tend to benefit from US growth.

A sustained leg higher in stocks could see gold prices retest their 2014 lows around $1,180 an ounce, Mr. McGhee said.

A stronger dollar, which rose against the euro and the yen, also weighed on gold prices. The dollar was recently changing hands at 106.60 Japanese yen, up from ¥106.13 earlier. The euro sank to $1.2772 from $1.2837 earlier.

Price Rise

Gold is traded in dollars and becomes more expensive for foreign buyers when the greenback strengthens against other currencies.

Platinum and palladium prices rose in response to upbeat car-sales data from Europe. Both metals are widely used in car-exhaust filters, making their price sensitive to changes in global automotive demand.

European car sales rose to 1.24 million vehicles in September and are up 6.1% from the start of the year to 9.57 million.

Platinum for January delivery rose 0.8% to $1,261.50 a troy ounce on the Nymex, while December-delivery palladium climbed 1.4% to $756.70 an ounce.